Consumer Confidence Is Plunging Off The Cliff

First it was Frankenstorm Sandy that disrupted the lives, homes, and Holidays of 60 million people - causing retail sales to decline 3.9% and 1.4% in the Mid-Atlantic and Northeast states respectively. Then it was the Sandy Hook tragedy that took the lives of 26 people including 20 young first graders in Newtown, Connecticut - a unforgettable tragedy that most of us are still trying to process. And now we are witnessing a void in political leadership as we approach the fiscal cliff. It is no wonder that the stock market has tumbled and consumer confidence has plunged to 65.1 - its lowest level in months. If that is not enough bad news in a short period of time, some say that the looming debt ceiling talks pose an even greater risk to the economy. With the red and blue divide as wide as ever, many are worried that the same actors will initiate an encore performance over the upcoming debt ceiling talks. For the sake of the country "can't we all just get along?"

What can be done?

To help restore consumer confidence, the media needs to do a better job of accentuating the positive and stop just talking about the negative. Believe or not there are some very positive things going on in the economy. In November, new home sales grew by the highest rate in the past 2.5 years. Median home prices were also up 14.9% compared with the same month last year. According to the Conference Board, measurement of present conditions in December climbed to 62.8 from 57.8 in November. That's the highest level since August of 2008. According to the labor department, the unemployment rate dropped to the lowest levels in four years, and despite hurricane Sandy, employers added 146,000 jobs in November. And, Bloomberg's Consumer Comfort Index approached a four-year high last week.

Most of the problems are man-made

Since the fiscal cliff and debt ceiling problems are an invention of dysfunctional politics, the public needs to do a better job of communicating its dissatisfaction with political leaders that are sticking to hardened doctrines rather than compromising. Up until the invention of red and blue states, Americans were pragmatic and willing to work things out rather than stick to intransigent doctrines. Doctrinaire behavior was for dictators and extremists - not for democracies. If people want to be doctrinaire, they have a lot of other countries from which to choose. They should not be here contributing to gridlock in our political and social institutions. With social media and the ease at which we, the American public, can contact our congressional representatives, we need to make our dissatisfaction heard. Real problems are already being caused and costs are being incurred by all of us from uncertainty in workplaces, payroll systems, and planning for the future as a result of the fiscal cliff. Congressmen will still get top-level healthcare and their paychecks financed by the American Public no matter what they do. If they knew that their jobs and benefits were at risk, perhaps they would behave differently. We all voted them in. We need to vote out the ones that are not willing to compromise.

We need consumers to feel confident again

Most important of all, since consumer spending is roughly 70% of our economy, we all need to work together to get consumers to feel confident again. If we don't this economy will be stuck in neutral for years to come. If that happens, we can kiss our status as the number one economy (and the number one in so many other areas) good bye. As everyone celebrates the New Year, each and every one of us needs to ask ourselves if we want to see that happen. If we don't, we need to let our elected officials know how we feel about their very immature, unprofessional, and doctrinaire behavior.

For now, I hope you have a Happy New Year.

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